Go Back Email this Link to a friend


Sacoil Holdings Limited - Reviewed Interim Results For The Six Months Ended 31 August 2014

Release Date: 04/11/2014 17:00:00      Code(s): SCL     
SacOil Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
JSE share code: SCL AIM share code: SAC
ISIN: ZAE000127460
("SacOil" or "the Company" or "the Group")


REVIEWED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2014


HIGHLIGHTS
- Cementing of Board and executive team
- Transition from development to production initiated
- Acquisition of 20% interest in Nigeria's OPL 233 completed; seismic survey initiated
- Completion of satellite imagery survey for Botswana assets and ESIA initiation in Malawi
- Strategic entry into Egypt through 100% acquisition of Lagia Oil Field
- Active review of capital structure and funding options


Dr Thabo Kgogo, Chief Executive of SacOil, commented: "We attained a number of milestones
during this period with the support of a new Board and re-energised executive team.

In particular, the acquisition of Lagia Oil Field in Egypt marks our transition from
a development to a production company supported by a reserve base able to deliver
production and cash flow in the near term. This transformational transaction also
provides us with greater access to the capital markets as we roll out our strategy to
build a substantial pan-African exploration and production business.

Looking ahead, our funding situation remains a top priority and we will continue to work
towards the successful resolution of the loan situation with EERNL but also actively
review alternative options, including rebalancing of our portfolio. The completion of
the forensic investigation and resolution of the matters raised will remain a priority
of the Board."

OVERVIEW
SacOil is an independent African oil and gas company, dual-listed on the JSE and AIM,
and has business operations that are focused across the African continent. Currently,
the Group operates in the following jurisdictions: the Democratic Republic of Congo
("DRC"); the Republic of Malawi; the Republic of Botswana; and the Federal Republic
of Nigeria. Further, the Company continues to evaluate opportunities to secure high-
impact acreage in other established and prolific hydrocarbon basins in Africa.
OPERATIONS
Shareholders are referred to the announcement issued on SENS and RNS on 9 October 2014,
in which the Company communicated a detailed update on its asset-level operations.

FINANCIAL REVIEW
The Group reported a decrease of 23% in profit after tax to R20.7 million for the
six months ended 31 August 2014 compared to R27.0 million for the corresponding prior
comparative period. Although the Group's investment income increased by 64%, the
resultant increase was off-set by foreign exchange losses on the Group's financial assets
coupled with higher other operating costs.

The increase in investment income is attributable to the compounding effect of the
interest accruals on the loan advanced to Energy Equity Resources (Norway) Limited
("EERNL"). Furthermore, the loan now attracts interest of 32% compared to 30% for the
corresponding prior comparative period, following the renegotiation of the loan
repayment terms (refer to note 13). The composition of investment income is disclosed
in note 4.

Other operating costs, as disclosed in note 3, increased by 305% to R46.6 million
(2013: R11.5 million) during the period under review. The Group impaired its financial
assets by R19.7 million (2013: nil). The increase is also reflective of the Group's
investment in business development activities.

The Group's foreign exchange losses for the six months total R7.2 million (2013:
R43.7 million foreign exchange gains). The US dollar / Rand exchange rate was less
volatile during the six months under review compared to the corresponding prior
comparative period when it fluctuated between R8.8398/US$1 and R10.3016/US$1 at the
beginning and end of the reporting period, respectively.
The Group extinguished all its debt in January 2014, resulting in the elimination of
borrowing costs (2013: R10.5 million).

Exploration and evaluation assets increased by R29.2 million to R296.0 million
(28 February 2014: R266.8 million) as a result of the Group capitalising the seismic
survey costs relating to OPL 233.

Other financial assets, as disclosed in note 8, increased by R35.2 million to
R691.1 million (28 February 2014: R655.9 million). The net movement comprises:
-   An increase in interest of R73.4 million on the EERNL loan (R59.4 million),
    contingent consideration (R10.7 million) and other financial assets (R3.3 million);
-   A part repayment of the EERNL loan of R10.6 million;
-   An impairment charge of R19.7 million against the EERNL loan; and
-   Foreign exchange losses totalling R7.9 million.

Cash and cash equivalents comprise the translated US$10 million cash collateral held
as security for the performance bond on OPL 233 of R106.7 million (28 February 2014:
R108.1 million) and cash deposits amounting to R214.0 million (28 February 2014:
R273.5 million). The decrease in cash is reflective of the Group's investment in the
OPL 233 seismic survey, business development activities and normal operating costs.

Other financial liabilities, as disclosed in note 10, decreased by R20.9 million,
reflecting the settlement of the amounts owed to Nigdel United Oil Company, the
operator of OPL 233.
GOING CONCERN
The Board continues to explore funding and other alternatives available to the Group
to ensure that the Group has adequate resources to continue operating for the next
12 months. The Group interim financial statements presented have been prepared on a
going concern basis as detailed in note 14.

REPORTABLE IRREGULARITY
The Board of SacOil recently engaged Ernst & Young Inc. to carry out a forensic
investigation on specific historical transactions of the Company between 1 August 2011 and
30 November 2011 relating to the Company's unsuccessful attempt to acquire interests in
Block I and II in the DRC, amongst other matters.
Based on matters raised in the preliminary forensic report, Ernst & Young Inc., the
Company's external auditors, have reported to the Independent Regulatory Board for
Auditors that they have reason to believe that Reportable Irregularities committed by
previous members of management took place. These Reportable Irregularities relate to
matters which do not affect the current condensed consolidated interim financial statements.
The directors do not expect that future losses will arise from the matters raised.

The forensic investigation represents a key step taken by the Board to address historical
governance issues.

Shareholders will be kept informed of progress made regarding this matter.
CHANGE IN DIRECTORATE
On 1 June 2014 the new CEO, Dr Thabo Kgogo, joined SacOil and was appointed to the Board.
On 11 August 2014 Bradley Cerff was appointed to the Board as an Executive Director.
OUTLOOK
Good progress has been made across the existing portfolio of exploration and appraisal
assets during the period.

The acquisition of the Lagia Oil Field in Egypt completed in October 2014 marks an
inflexion point in SacOil's investment profile with the Company transitioning from a pure
exploration play to an exploration and production business with cash-generating assets.
SacOil is now focusing on its funding situation and will assess various alternatives
to ensure that an adequate capital structure is in place to deliver on its stated
strategy. This may include a combination of portfolio rebalancing, rationalisation of
assets and alternative funding options which are being continually assessed. The
resolution of the US$18 million loan due to SacOil by EERNL is a top priority which
is anticipated to be resolved before the end of the financial year.
Longer term, SacOil will continue to execute on ongoing projects in the Democratic
Republic of Congo, Malawi, Botswana and Nigeria which are all expected to yield
significant future milestones and value for the Group. The partnership announced in
March 2014 between SacOil, the Public Investment Corporation of South Africa and the
Instituto De Gestao Das Participacoes Do Estado in Mozambique regarding the
investigation of gas opportunities and future distribution of gas in southern Africa
also offers exciting prospects.


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                                                Reviewed             Reviewed
                                                              Six months           Six months
                                                            to 31 August         to 31 August
                                                                    2014                 2013
                                                     Note              R                    R
Other income                                                           -           43 737 699
Other operating costs                                        (46 575 517)         (11 501 668)
Operating (loss)/profit                                3     (46 575 517)          32 236 031
Investment income                                      4      77 001 921           46 927 405
Finance costs                                                       (646)         (10 474 963)
Profit before taxation                                        30 425 758           68 688 473
Taxation                                                      (9 756 554)         (41 712 659)
Profit for the period                                         20 669 204           26 975 814
Total comprehensive income for the period                     20 669 204           26 975 814
Profit/(loss) attributable to:
Equity holders of the parent                                  22 320 598           26 284 839
Non-controlling interest                                      (1 651 394)             690 975
                                                              20 669 204           26 975 814
Total comprehensive income/(loss) attributable to:
Equity holders of the parent                                  22 320 598           26 284 839
Non-controlling interest                                      (1 651 394)             690 975
                                                              20 669 204           26 975 814
Earnings per share
Basic (cents)                                          6              0.72                 2.76
Diluted (cents)                                        6              0.72                 2.76


CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                                Reviewed        Audited
                                                              Six months Twelve months
                                                            to 31 August to 28 February
                                                                    2014           2014
                                                     Note              R              R
ASSETS
Non-current assets
Property, plant and equipment                                    216      164         247      207
Exploration and evaluation assets                      7     296 012      868     266 809      536
Other intangible assets                                          130      172         175      476
Other financial assets                                 8     461 698      405     433 344      048
Total non-current assets                                     758 057      609     700 576      267
Current assets
Other financial assets                                 8      229   396   582      222 542     359
Trade and other receivables                                     4   549   486          649     764
Cash and cash equivalents                              9      320   705   723      381 579     766
Total current assets                                          554   651   791      604 771     889
Total assets                                                1 312   709   400    1 305 348     156
EQUITY AND LIABILITIES
Shareholders' equity
Stated capital                                              1 109   977   054 1 109 977 054
Reserves                                                        6   001   847     6 001 847
Accumulated loss                                             (157   105   558) (179 426 156)
Equity attributable to equity holders of parent               958   873   343   936 552 745
Non-controlling interest                                       10   567   082    12 218 476
Total shareholders' equity                                    969   440   425   948 771 221
Liabilities
Non-current liabilities
Deferred tax liability                                        93 820 127           92 498 394
Total non-current liabilities                                 93 820 127           92 498 394
Current liabilities
Other financial liabilities                           10       53   242   500      74 167 311
Share-based payment liability                                   1   066   000               -
Current tax payable                                           183   250   024      176856 253
Trade and other payables                                       11   890   324       13054 977
Total current liabilities                                     249   448   848      264078 541
Total liabilities                                             343   268   975      356576 935
Total equity and liabilities                                1 312   709   400    1 305348 156
Number of shares in issue                                   3 086 169 261        3 086 169 261
Net asset value per share (cents)                                   31.41                30.74
Net tangible asset value per share (cents)                          21.82                22.10


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 August 2014
                                                                                                      Total equity
                                                                                                      attributable
                                                             Share-based                                 to equity          Non-
                                                   Stated        payment          Accumulated           holders of   controlling         Total
                                                  capital        reserve                 loss           the parent      interest        equity
                                                        R              R                    R                    R             R             R
Balance at 28 February 2014                 1 109 977 054      6 001 847         (179 426 156)         936 552 745    12 218 476   948 771 221
Changes in equity:
Profit/(loss) for the period                          -                    -       22 320 598          22 320 598    (1 651 394)   20 669 204
Total comprehensive income/(loss)
  for the period                                      -                -           22 320 598          22 320 598    (1 651 394)    20 669 204
Total changes                                         -                -           22 320 598          22 320 598    (1 651 394)    20 669 204
Balance at 31 August 2014                 1 109 977 054        6 001 847         (157 105 558)        958 873 343    10 567 082    969 440 425
For the six months ended 31 August 2013
Balance at 28 February 2013                 534 172 123       26 681 469         (219 700 074)        341 153 518    22 298 155    363 451 673
Changes in equity:
Profit for the period                                 -                -           26    284   839     26 284 839       690 975     26 975 814
Total comprehensive income for the period             -                -           26    284   839     26 284 839       690 975     26 975 814
Share options lapsed                                  -      (20 679 622)          20    679   622              -             -              -
Total changes                                         -      (20 679 622)          46    964   461     26 284 839       690 975     26 975 814
Balance at 31 August 2013                   534 172 123        6 001 847         (172    735   613)   367 438 357    22 989 130    390 427 487


CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                Reviewed             Reviewed
                                                              Six months           Six months
                                                            to 31 August         to 31 August
                                                                    2014                 2013
                                                                       R                    R
Cash flows from operating activities
Cash used in operations                                      (24 114 839)          (8 739      666)
Interest income                                                3 528 096              217      185
Tax received                                                           -               32      412
Net cash used in operating activities                        (20 586 743)          (8 490      069)
Cash flows from investing activities
Purchase of exploration and evaluation assets                (29 233      332)     (4 210 593)
Purchase of property, plant and equipment                        (28      986)              -
Receipts from loans and receivables                           10 607      190       4 303 501
Net cash (used in)/from investing activities                 (18 655      128)         92 908
Cash flows from financing activities
(Repayment of)/proceeds from other financial liabilities     (20 220 311)           3 288 700
Net cash (used in)/from financing activities                 (20 220 311)           3 288 700
Total movement in cash and cash equivalents
  for the period                                             (59 462 182)          (5 108 461)
Foreign exchange (losses)/gains on cash and
  cash equivalents                                             (1 411 861)        14 656 775
Cash and cash equivalents at the beginning of the period      381 579 766         94 032 416
Cash and cash equivalents at the end of the period            320 705 723        103 580 730


NOTES
1 BASIS OF PREPARATION
   The consolidated condensed interim financial statements of the Group, comprising
   SacOil Holdings Limited and its subsidiaries (together "the Group"), for the six months
   ended 31 August 2014, have been prepared in accordance with the recognition and
   measurement criteria of International Financial Reporting Standards ("IFRS") as issued
   by the International Accounting Standards Board ("IASB"), the preparation and
   disclosure requirements of IAS 34 - Interim Financial Reporting, the SAICA Financial
   Reporting Guides as issued by the Accounting Practices Committee, the Financial
   Pronouncements as issued by the Financial Reporting Standards Council, the Listings
   Requirements of the JSE Limited and in the manner required by the South African
   Companies Act, No. 71 of 2008 (as amended).

    Principal accounting policies
    The same accounting policies, presentation and methods of computation have been followed
    in these consolidated condensed interim financial statements of the Group as those applied
    in the preparation of the Group's annual financial statements for the year ended
    28 February 2014.

    The consolidated condensed interim financial statements of the Group should be read
    in conjunction with the Group's consolidated annual financial statements for the year
    ended 28 February 2014.

    The following   new IFRS and/or IFRICs were effective for the first time for this interim
    period from 1   January 2014:
    - Amendments    to IFRS 10, IFRS 12 and IAS 27, Investment Entities
    - Amendments    to IAS 32, Off-setting Financial Assets and Financial Liabilities
    - Amendments    to IAS 36, Recoverable Amount Disclosures for Non-financial Assets
    - Amendments    to IAS 39, Novation of Derivatives and Continuation of Hedge Accounting

    The above standards did not have an impact on the Group's results.

    Notes to oil and gas disclosure
    In accordance with AIM Guidelines, Bradley Cerff is the qualified person that has
    reviewed the technical information contained in this news release. Bradley has
    18 years' experience in the oil and gas industry with a Masters Degree in Science
    and Business Administration focused on Foreign Direct Investment in the African oil
    and gas industry. He is also a member of the Society of Petroleum Engineers.

2   AUDITOR'S REVIEW REPORT
    The condensed consolidated interim financial statements are prepared in accordance with
    International Financial Reporting Standard, IAS 34, Interim Financial Reporting, the SAICA
    Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
    Pronouncements as issued by Financial Reporting Standards Council and the requirements of
    the Companies Act of South Africa. The accounting policies applied in the preparation of
    these interim financial statements are in terms of International Financial Reporting
    Standards and are consistent with those applied in the previous annual financial statements.
    These interim condensed consolidated financial statements for the period ended 31 August 2014
    have been reviewed by Ernst & Young Inc. who expressed an unmodified review conclusion.
    They have been prepared under the supervision of the Group's Financial Director:
    Tariro Mudzimuirema CA (SA).

    The unqualified review report includes an Emphasis of Matter Paragraph on material
    uncertainties relating to the going concern of the entity.

    The report also includes an "Other Legal and Regulatory Requirements" paragraph with respect
    to reportable irregularities which were reported in terms of section 45 of the Auditing
    Profession Act to the Independent Regulatory Board for Auditors (IRBA). The reportable
    irregularities are based on the further analysis by the external auditors of the preliminary
    findings of a forensic investigation into the historical conduct of the affairs of the
    Company, which investigation was instituted by the Company on the instruction of the board.
    The board is considering the section 45 report to the IRBA in relation to the reportable
    irregularities, with a view to take such action as is appropriate.
    A copy of the auditor's review report is available for inspection at the Company's registered
    office together with the financial statements identified in the auditor's report.


                                                            31 August 2014 31 August 2013
                                                                         R              R
3   OPERATING (LOSS)/PROFIT
    Foreign exchange (losses)/gains                            (7 243     168)   43 737 699
    Provision for impairment of financial asset (note 8)      (19 736     842)            -
    Corporate costs                                            (1 533     726)   (1 496 983)
    Auditor's remuneration                                     (1 017     750)     (140 926)
    Employee benefit expense                                   (8 780     907)   (5 171 965)
    Accounting fees                                               (34     400)      (20 000)
    Consulting fees                                            (2 084     710)     (759 620)
    Legal fees                                                   (485     718)     (947 065)
    Travel and accommodation                                   (1 627     679)     (691 390)
    Depreciation                                                 (105     334)      (94 046)
    Property, plant and equipment                                 (60     030)      (63 235)
    Other intangible assets                                       (45     304)      (30 811)
    Rentals - premises                                           (497     871)     (561 303)
    Broker's fees                                                (545     863)     (744 998)
                                                            31 August 2014 31 August 2013
                                                                         R              R
4   INVESTMENT INCOME
    Interest receivable - loans                                59   430   348    34 225   495
    Interest received - cash and cash equivalents               3   528   096       217   185
    Imputed interest on financial assets                       14   043   477    12 484   725
                                                               77   001   921    46 927   405

5   SEGMENTAL REPORTING
    The Group operates in five geographical locations which form the basis of the information
    evaluated by the Group's chief operating decision-maker. For management purposes the
    Group is organised and analysed by these locations. These locations are: South Africa,
    Nigeria, DRC, Botswana and Malawi. Operations in South Africa relate to the general
    management, financing and administration of the Group.

                                                  Nigeria                 DRC        Malawi     Botswana    South Africa       Consolidated
                                                        R                   R             R            R               R                  R
    For the six months ended 31 August 2014
    Other income                                        -                 -                -           -                  -              -
    Investment income                                 109      10   718 172                -           -     66 283     640     77 001 921
    Finance costs                                       -              (621)               -           -                (25)          (646)
    Other operating expenses                   (1 003 951)     (1   627 639)               -    (491 032)   (43 452     895)   (46 575 517)
    Taxation                                          (11)    (14   602 884)               -           -      4 846     341     (9 756 554)
    Profit/(loss) for the period               (1 003 853)     (5   512 972)               -    (491 032)    27 677     061     20 669 204

    Segment assets
    - non-current                             220 393 305     303 726 387           866 740     386 548     232 684 629        758 057 609
    - current                                 106 732 672      38 425 476                 -           -     409 493 643        554 651 791
    Segment liabilities
    - non-current                                       -     (91 744 045)                 -           -     (2 076 082)        (93 820 127)
    - current                                 (53 242 500)   (146 310 390)                 -    (222 400)   (49 673 558)       (249 448 848)

    For the six months ended 31 August 2013
    Other income                                        -      27 078 912                  -          -      16   658   787     43   737   699
    Investment income                             211 077       9 693 141                  -          -      37   023   187     46   927   405
    Finance costs                                       -               -                  -          -     (10   474   963)   (10   474   963)
    Other operating expenses                      (17 793)              -                  -     (8 241)    (11   475   634)   (11   501   668)
    Taxation                                       32 413     (34 612 756)                 -          -      (7   132   316)   (41   712   659)
    Profit/(loss) for the period                  225 697       2 159 297                  -     (8 241)     24   599   061     26   975   814
    Segment assets
    - non-current                             131 009 869     324 724 643           896 740     386 548     195 125 810        652 143 610
    - current                                 103 235 757          67 931                 -           -     155 657 344        258 961 032
    Segment liabilities
    - non-current                                       -     (88 755 267)                 -          -                -        (88 755 267)
    - current                                 (51 508 000)    (94 037 825)                 -          -     (286 376 063)      (431 921 888)
                                                             31 August 2014 31 August 2013
                                                                          R              R
6    EARNINGS PER SHARE
     Basic (cents)                                                     0.72                 2.76
     Diluted (cents)                                                   0.72                 2.76

     Profit for the period used in the calculation of
       the basic and diluted earnings per share                 22 320 598          26 284 839

     Weighted average number of ordinary shares used
       in the calculation of basic earnings per share        3 086 169 261         953 340 791
     Issued shares at the beginning of the reporting
       period                                                3 086 169 261         953 340 791
     Effect of shares issued during the reporting period
       (weighted)                                                        -                    -
     Add: Dilutive share options                                 2 325 710                    -
     Weighted average number of ordinary shares used in
       the calculation of diluted earnings per share         3 088 494 971         953 340 791
     Headline earnings per share
     Basic (cents)                                                     0.72                 2.76
     Diluted (cents)                                                   0.72                 2.76
     Reconciliation of headline earnings
     Profit for the period                                      22 320 598          26 284 839
     Headline earnings for the period                           22 320 598          26 284 839
7    EXPLORATION AND EVALUATION ASSETS
                            At 28 February                    At 31 August                              28 February                             At 31 August
                                      2013       Additions            2013           Additions                 2014    Additions   Disposals            2014
     Block III DRC              74 366 275               -      74 366 275                   -           74 366 275            -           -      74 366 275
     OPL 281 Nigeria            44 072 922               -      44 072 922                   -           44 072 922            -           -      44 072 922
     OPL 233 Nigeria            43 523 230      43 413 717      86 936 947          60 150 104          147 087 051   29 233 332           -     176 320 383
     Botswana                            -         386 548         386 548                   -              386 548            -           -         386 548
     Malawi                        896 740               -         896 740                   -              896 740            -     (30 000)        866 740
                               162 859 167      43 800 265     206 659 432          60 150 104          266 809 536   29 233 332     (30 000)    296 012 868
     OPL 233
     No borrowing costs have been capitalised during the period under review (August 2013:
     R32.6 million), as the Group settled the debt previously incurred to finance OPL 233,
     in January 2014. Exploration expenditures totalling R29.3 million (August 2013:
     R10.8 million) have been capitalised, primarily relating to the seismic survey.
                                                             31 August 2014       28 February 2014
                                                                          R                      R
8    OTHER FINANCIAL ASSETS
     Non-current
     Contingent consideration                                  229   360   113        221   493   152
     Deferred consideration on disposal of Greenhills Plant      3   442   662          3   281   164
     Advance payment against future services                    65   459   171         62   388   430
     Loan due from EER                                         163   436   459        146   181   302
                                                               461   698   405        433   344   048
     Current
     Loan due from EER                                         237   930   825        210   835   454
     Loan due from DIG                                          47   097   098         47   694   469
     Deferred consideration on disposal of Greenhills Plant      1   983   876          1   890   811
                                                               287   011   799        260   420   734
     Less: Provision for impairment                            (57   615   217)       (37   878   375)
                                                               229   396   582        222   542   359
     Total                                                     691   094   987        655   886   407

9    CASH AND CASH EQUIVALENTS
     Cash and cash equivalents comprise:
     Bank balances                                              10   610   303        273 466 636
     Short-term deposits                                       203   394   054                  -
                                                               214   004   357        273 466 636
     Restricted cash                                           106   701   366        108 113 130
                                                               320   705   723        381 579 766
     Restricted cash comprises the cash collateral of US$10 million (February 2014: US$10 million)
     paid to Ecobank to secure the US$25 million performance bond on OPL 233. The cash is held
     in the bank account of SacOil's wholly-owned subsidiary, SacOil 233 Nigeria Limited. The
     remainder of the performance bond is secured by a first ranking legal charge over SacOil's
     investment in SacOil 233 Nigeria Limited.
                                                             31 August 2014       28 February 2014
                                                                          R                      R
10   OTHER FINANCIAL LIABILITIES
     Energy Equity Resources (Norway) Limited                   53 242 500             53 947 000
     Nigdel United Oil Company Limited                                   -             20 220 311
                                                                53 242 500             74 167 311
                                                             31 August 2014        31 August 2013
                                                                          R                     R
11   CONTINGENT ASSETS AND LIABILITIES
     Commitments
     Exploration and evaluation assets - work programme
       commitments                                             744 044 728            413 938 891
     Exploration and evaluation activities will be funded from current cash resources and
     funds from future capital-raising initiatives.
                                                             31 August 2014       28 February 2014
                                                                          R                      R
     Contingent liabilities
     Performance bond on OPL 233 issued by Ecobank in
       respect of OPL 233 exploration activities               159 727 500            161 841 000
     Cost carry arrangement with Total                          36 591 084             36 508 805
     Farm-in and transaction fees on receipt of title
       to OPL 233                                              139 495 350            141 341 140
     Farm-in and transaction fees on receipt of title
       to OPL 281                                              154 403 250            156 446 300
                                                               490 217 184            496 137 245

     Performance bond
     In April 2012, the Group posted a US$25 million performance bond to support the work
     programme on OPL 233. This performance bond is secured by a R106.7 million (US$10 million)
     (28 February 2014: R108.1 million (US$10 million)) cash collateral as disclosed in note 9.
     The remainder of the performance bond, disclosed as a contingent liability, is secured by
     a first ranking legal charge over SacOil's investment in SacOil 233 Nigeria Limited.
     Cost carry arrangement
     The farm-in agreement between Semliki and Total provides for a carry of costs by Total
     on behalf of Semliki. Total will be entitled to recover these costs, being Semliki's
     share of the costs on Block III, plus interest, from future oil revenues. The contingency
     becomes probable when production of oil commences and will be raised in full at that point.
     At 31 August 2014, Total has incurred R36.6 million (28 February 2014: R36.5 million) of
     costs on behalf of Semliki. Should this liability be recognised, a corresponding increase in
     assets will be recognised, which, together with existing exploration and evaluation assets,
     will be recognised as development infrastructure assets.
     Farm-in and transaction fees
     OPL 233
     A farm-in fee of R112.9 million (28 February 2014: R114.3 million (US$10.6 million)) is due
     to Nigdel United Oil Company Limited ("Nigdel") following the formal approval by the Nigerian
     Government of the assignment of title to SacOil 233 Nigeria Limited in relation to OPL 233.
     The existence of the possible obligation to Nigdel will be confirmed by the occurrence of an
     uncertain future event, being the verification of the award of title, which process is not
     wholly within the control of SacOil. A transaction fee of R26.6 million (28 February 2014:
     R27.0 million (US$2.5 million)) is also due to Energy Equity Resources (Norway) Limited
     ("EERNL") following the assignment of title to OPL 233, pursuant to the provisions of the
     Master Joint Venture Agreement. The fee payable to EER will be off-set against the loan
     receivable from EERNL, when the award of title has been verified, if this occurs prior to the
     settlement of the loan.
     OPL 281
     A farm-in fee of R127.8 million (28 February 2014: R129.4 million (US$12 million)) is due to
     Transnational Corporation of Nigeria Limited upon the formal approval by the Nigerian
     Government of   the assignment of title to SacOil 281 Nigeria Limited in relation to OPL 281.
     A transaction   fee of R26.6 million (28 February 2014: R27.0 million (US$2.5 million)) is due
     to EERNL upon   the assignment of title to OPL 281, pursuant to the provisions of the Master
     Joint Venture   Agreement.
12   DIVIDENDS
     The Board has resolved not to declare any dividends to shareholders for the period under review.
13   SUBSEQUENT EVENTS
     Acquisition of 100% interest in the Lagia oil field, onshore Sinai Peninsula, Egypt
     Shareholders are referred to the announcement issued on SENS and RNS on 10 September 2014
     wherein the Company announced that it had entered into a sale and purchase agreement dated
     9 September 2014 (the "Agreement") to acquire a Cyprus-registered exploration and production
     company, Mena International Petroleum Company Ltd ("MIP"), from Mena International Petroleum
     Holdings Company Ltd (the "Seller"), a wholly-owned subsidiary of TSX Venture listed as Mena
     Hydrocarbons Inc. (TSXV:MNH) ("Mena Hydrocarbons") (the "Acquisition"). MIP has a 100% interest
     in the development lease for the Lagia oil field, covering an area of approximately 32 square
     kilometres on the Sinai Peninsula in Egypt. The Lagia oil field is at a development stage with
     heavy oil (16 - 18 degree API) in shallow reservoirs and light oil potential in deeper reservoirs.
     The assets include existing production facilities and oil storage for 3 000 barrels of oil.
     The completion of the Acquisition is expected to occur on or about 31 October 2014. The full
     announcements are available on the SacOil website: www.sacoilholdings.com.
     Loan advanced to EERNL
     On 20 October 2014, the repayment of the loan due from EERNL   was extended to 30 November 2014.
     As part of the extension terms, EERNL agreed to pay interest   of 32% on the outstanding loan and
     to accept the interest on the non-cash component of the loan   previously disputed. The loan is
     secured by EERNL's shares in its subsidiary, EER233 Nigeria,   which holds a 20% interest in
     OPL 233. The loan has not been impaired in full as the value   of the security exceeds the
     carrying value of the loan.
14   GOING CONCERN
     The Company continues to remain dependent on its ability to obtain sufficient funding to sustain
     operations and complete its exploration projects. While the Company has been successful in
     raising financing in the past, there can be no absolute assurance that it will be able to do so
     in future. As noted in note 13, the repayment of the loan advanced to EERNL has been extended to
     30 November 2014, whilst EERNL undergoes its own recapitalisation, which will enable it to settle
     in full the loan owed to SacOil. Whilst this would be the best outcome for the Company, given the
     implications of default by EERNL, it is difficult to determine with certainty the outcome of the
     planned recapitalisation and, consequently, the settlement of the loan owed to SacOil. Should EERNL
     default on 30 November 2014, the Company will acquire an additional 20% interest in OPL 233, being
     the security provided for the debt, which will double SacOil's funding commitments for the OPL 233
     asset. The disposal of this additional interest would not be expected to occur immediately upon
     default given the seismic survey that is still under way. The cash flow projections to February 2016
     include cash inflows from EERNL totalling R201.0 million (US$18.0 million).
     The above conditions give rise to material uncertainties which may cast significant doubt about the
     Company's ability to continue as a going concern and, therefore, that it may be unable to realise its
     assets and discharge its liabilities in the normal course of business. The Board remains reasonably
     confident that it will manage the material uncertainties that exist, as such the financial statements
     have been prepared on the basis of accounting policies applicable to a going concern. This basis
     presumes that funds will be available to finance future operations and that the realisation of assets
     and settlement of liabilities, contingent obligations and commitments will occur in the ordinary
     course of business.
By order of the Board


Dr Thabo Kgogo
Chief Executive
Johannesburg
4 November 2014


CORPORATE INFORMATION
Registered office and physical address:
2nd Floor, The Gabba, Dimension Data Campus, 57 Sloane Street, Bryanston, 2021
Postal address:
PostNet Suite 211, Private Bag X75, Bryanston, 2021
Contact details:
Tel: +27 (0) 11 575 7232    |   Fax: +27 (0) 11 576 2258
E-mail: info@sacoilholdings.com    |   Website: www.sacoilholdings.com

Directors:
Dr Thabo Kgogo (Chief Executive Officer), Tariro Mudzimuirema (Finance Director),
Bradley Cerff (Executive Director), Tito Mboweni**, Mzuvukile Maqetuka**, Stephanus Muller**,
Vusi Pikoli**, Ignatius Sehoole*, Gontse Moseneke*, Danladi Verheijen*, Titilola Akinleye*
* Non-executive Directors
** Independent Non-executive Directors
Advisers
Company Secretary:
Fusion Corporate Secretarial Services (Proprietary) Limited
Transfer Secretaries South Africa:
Link Market Services South Africa (Proprietary) Limited
Transfer Secretaries United Kingdom:
Computershare Investor Services (Jersey) Limited
Corporate Legal Advisers:
Norton Rose Fullbright South Africa

Auditors:
Ernst & Young Inc.

JSE Sponsor:
Nedbank Capital, a division of Nedbank Limited

AIM Nominated Adviser:
finnCap Limited

Investor Relations:
Instinctif Partners (London and Johannesburg)

Date: 04/11/2014 05:00:00 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             . The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.


                                        
Email this JSE Sens Item to a Friend.

Send e-mail to
© 2017 SHARENET (PTY) Ltd, Cape Town, South Africa
Home     Terms & conditions    Privacy Policy
    Security Notice    Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.